“Liability under S.138 of the NI Act would subsist despite the initiation of proceedings under the Insolvency and Bankruptcy Code, 2016,” Supreme Court, in a significant affirmation of corporate accountability, has held that the criminal liability of directors under Section 138 of the Negotiable Instruments Act, 1881, remains unaffected by the subsequent initiation of liquidation proceedings against the accused company.
A bench comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan, in an order dated April 16, 2026, refused to interfere with a Bombay High Court judgment which had set aside the discharge of directors in a cheque bounce case. The Court emphasized that once the offence is completed, the…